Carlos Tavares warned that the reduction in the price of electric cars could ruin some manufacturers
Demand for electric cars has begun to slow, and this has prompted Elon Musk to once again cut the prices of Tesla models, thus sacrificing profitability to increase sales. However, such an approach could be detrimental to some car manufacturers, warned Stellantis CEO Carlos Tavares.
“If you go down the path of cutting prices while ignoring the realities of your costs, it will lead to a bloodbath.” Right now I’m trying to prevent exactly that race to the bottom,” Tavares said at an event in Amsterdam where he unveiled Stellantis’ new EV platform.
The comments from one of the auto industry’s most powerful figures come amid a slowdown in electric vehicle sales that has also led to changes in plans for some leading manufacturers. Ford, for example, announced that it is reducing production of the F-150 Lighting pickup truck and will lay off some of its workers. What’s more, the American concern admitted that the production of EV brings it losses of 4.5 billion dollars a year.
Indicative of the difficult situation facing the leading manufacturers is the fact that none of Detroit’s Big Three – Ford, GM and Chrysler (respectively Stellantis), as well as Toyota, which sells the most cars in the US, will have advertising during the Super Bowl – the biggest sporting event across the ocean. This is the first time since 2001.
“I know a company that has brutally cut prices and its profitability has collapsed right now,” Tavares said, without naming Tesla or Musk. But his words come amid Tesla’s worst start to the year since the company went public on the stock market.
Elon Musk’s electric car giant began slashing prices as early as last year in an effort to stay ahead of a slowing market full of new competitors. However, this has caused Tesla’s profit margin to shrink by more than 40% year-over-year, according to the company’s third quarter 2023 report.
In turn, Stellantis announced earlier this month that it would cut operating costs by closing factories and laying off about 1,350 workers. However, the concern has no intention of lowering the prices of its electric cars. “When you do that, things become very difficult in the future,” Tavares warned.
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2024-01-20 13:30:47
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